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​ ​Bullish

​ Option Strategies for Bullish view

1. Long Call 
 

 
 
Introduction 
 
Buying a 'Call option' is the most basic & simplest strategy. It is recommended when your outlook on the 
underlying asset is positive & you expect the underlying asset price to rise 
 
When To Execute? 
 
When you expect a rise in the underlying asset price 
 
Trade 
 
Buy 1 lot ATM Call 
 
Maximum Profit 
 
Maximum reward remains uncapped 
 
Maximum Loss 
 
Since its a net debit trade you pay for buying the call option upfront i.e. Premium. Your maximum risk is 
capped 
 
Advantages 
Unlimited profit potential with capped risk 
 
Possibility of greater leverage than owning the stock 
 
Disadvantages 
 
100% potential loss of premium in case of inappropriate strike, choice of stock, time decay 
Greater leverage could prove detrimental in case the expected outlook fails 
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2. Bull Call Spread 

 
Introduction 
 
Bull Call Spread is a bullish strategy that is executed by buying a call and selling a higher strike call to fund it. It is 
a net debit strategy with limited risk to limited reward 
 
When To Execute? 
 
Bull Call spread is executed when we have a bullish outlook in Stock/ Index. Instead of buying naked call with 
higher outflow, one sells higher strike Call to partially fund the outflow resulting in hedged strategy 
 
Trade 
 
Buy 1 lot ATM call and Sell 1 lot OTM call 
 
Maximum Profit 
Maximum reward is limited to difference in strike less net outflow. Maximum Profit arises if the stock closes at 
or above the higher strike. Identifying clear uptrend is essential for the strategy 
 
Maximum Loss 
Maximum risk is limited to the difference in cost of long and short calls. Breakeven for the strategy would be 
lower strike + net outflow 
 
Advantages 
Helps to participate in a bullish stock with relatively low cost 
 
Reduced risk, cost, and breakeven point for a medium- to long-term bullish trade as compared to buying a call 
alone 
Capped downside (although still 100% of the outlay) 
 
Disadvantages 
Capped profit if the stock closes above short Call 
Identifying clear area of resistance and selection of strike becomes very important 
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3. Bull Put Spread 

 
Introduction 
 
Bull Put Spread is a bullish income strategy that could be executed when one expects the underlying to find 
support and inch higher 
 
When To Execute? 
 
Bull Put spread is executed when we have a bullish outlook in Stock/ Index. Lower strike put outflow is funded by 
higher strike in the money Put. It is a net credit strategy 
 
Trade 
 
Buy 1 lot ATM Put and Sell 1 lot 1 Deep ITM Put 
 
Maximum Profit 
 
Maximum reward is limited to difference between two strikes i.e. net capital inflow. Maximum Profit arises if the 
stock closes at or above the higher strike put resulting in both the strike ending worthless and you pocket entire 
initial inflow 
 
Maximum Loss 
 
Maximum risk is difference between both the strikes less credit inflow received initially. Maximum loss arises 
when stock closes below lower strike put 
 
Advantages 
 
Helps to generate sustain income if the view goes correct 
Can be used to repair loss making Long Put by selling higher ITM put 
Develop Limited risk, limited reward strategy 
 
Disadvantages 
Identifying clear area of support and resistance is essential 
If the stock closes below lower strike put, one can lose money 
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4. Bear Call Ladder 

 
Introduction 
 
The Bear Call Ladder is an extension to the Bear Call Spread. By buying another call at a higher strike, the position 
assures uncapped reward potential if the stock rises. 
 
When To Execute? 
 
Bear Call Ladder is a Bear Call Spread with an additional buy OTM Call. Outlook is to make capital gain while 
reducing maximum risk 
 
Trade 
 
Sell 1 lot ITM call, Buy 1 lot ATM Call & Buy 1 lot OTM strike Call (All equal quantity) 
 
Maximum Profit 
 
Maximum Profit is unlimited beyond Higher strike Call 
 
Maximum Loss 
 
It can be Net debit/ Net credit Strategy depending upon premium received from lower strike Call as we are buying 
more call then selling them 
 
Advantages 
 
One can use Bear Call Ladder to repair their loss making Bear Call Spread. You can participate in upside 
movement of stock while still limiting down side 
 
Disadvantages 
 
Time decay is generally harmful when stock is between lower and middle strike and helpful when stock is surging 
higher 
 
Clear understanding of the direction of the trend and identification of a clear area of both support and resistance 
could add value to the payoff 
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5. Call Ratio Back spread 

 
Introduction 
 
Call Ratio back spread is extremely bullish strategy that expects high volatility in the stocks. It requires sharp 
upward move in the stock 
 
When To Execute? 
 
Call Ratio Back spread is a bullish strategy that is formed with little or no net cost thereby reducing overall risk. It 
requires aggressive move in the stock 
 
Trade 
 
Sell 1 lot ATM Call and Buy 2 lots OTM call. Net cost to establish the strategy is very low 
 
Maximum Profit 
 
Maximum Profit is unlimited if the stock moves above higher strike call 
 
Maximum Loss 
 
Maximum loss is difference between the strike plus net outflow or less net inflow 
 
Advantages 
 
Reduced cost of formulating the strategy. In scenario were implied volatility of call is rising, it provides limited 
risk. Generates higher return in scenario where stock gives exponential return. 
 
Disadvantages 
 
Loss could be higher if the stock doesnt give desired move. Not meant for an intermediate trader. Time decay 
could be harmful to the strategy as we are net long. Strike selection becomes key to success. 

 
 
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6. Long Call Butterfly 

 
Introduction 
 
Long Call Butterfly is a range bound strategy that offers decent reward/risk along with low cost. In scenario where 
strike difference is not equal its is known as Modified Call Butterfly Spread 
 
When To Execute? 
 
When you are looking to execute a potentially high-yielding trade at a very low cost, where your maximum profit 
occurs if the stock is at the middle strike price at expiration;Ideal when one is anticipating very low volatility in the 
stock price 
 
Trade 
 
Buy 1 lot ITM Call, Sell 2 lots ATM Calls and Buy 1 lot OTM Call 
 
Maximum Profit 
 
Maximum risk is the net debit of the bought and sold options. Maximum reward is the difference between adjacent 
strike prices less the net debit. (Strikes are equidistance from each other) 
 
Maximum Loss 
 
It is Net debit Strategy. However Net cost to establish is very low 
 
Advantages 
 
It helps to participate in high yielding trade with relatively low cost 
 
Being completely hedge one can hold on to the stock till expiry 
 
Promising Reward to risk provides good odds to wins as stock has ample of room to perform 
 
Disadvantages 
 
Time decay is generally harmful when stock is near first strike or third strike and beneficial if stock price is near 
middle strike 
 
Strike selection is a key to garner maximum benefit 
 
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7. Short Put 

 
Introduction 
 
Shorting a Put option is a simple but risky strategy & hence qualified as an advanced strategy. It is recommended when the 
price of the underlying asset is expected to rise & the stock is not expected to fall further 
 
When To Execute? 
 
When you expect a rise in the underlying asset price with more degree of conviction Or when you are willing to buy an 
underlying if it comes to Short Put strike 
 
Trade 
 
Sell 1 lot OTM Put 
 
Maximum Profit 
 
Profit limited to the Put premium 
 
Maximum Loss 
 
Selling options exposes you to uncapped risk, potential loss could be heavy incase the directional momentum is reversed 
 
Advantages 
 
Profits from rising or range bound stocks 
 
Its an Income strategy 
 
Helps to generate income if the stock fails to move below put strike. Idle in a scenario when one is ready to buy the stock in 
correction if it falls to put strike 
 
Disadvantages 
 
Uncapped risk 
 
If the stocks falls below short Put strike , unlimited risk can arise 
 
 
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8. Bull Call Ladder 

 
Introduction 
 
Bull Call Ladder is neutral to Bullish Strategy that offers good return but with higher risk. Strategy entails 
buying 1 ATM and selling two higher strike OTM call at different strike 
 
When To Execute? 
 
To execute a mildly bullish trade by buying 1 ATM call and selling two OTM Calls to reduce initial 
outflow. 
 
Trade 
 
Buy 1 lot ITM Call, Sell 1 lot ATM and Sell 1 lot higher OTM 
 
Maximum Profit 
 
It is a Net debit strategy. Maximum Profit is difference between Middle strike and lower Strike Call less 
net initial outflow 
 
Maximum Loss 
 
Maximum Loss is unlimited if the stock moves above highest strike and second break even 
 
Advantages 
 
Bull Call Ladder is best executed in shorter term period to reduce possibility of uncapped risk if the 
underlying asset rises too much 
 
Disadvantages 
 
Time decay is harmful to the position around the buy strike price and becomes advantageous around 
the highest strike price 

 
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9. Ratio Call Spread 

 
Introduction 
 
Call Ratio Spread is Neutral to Mildly bullish Strategy. In this we expect stock to remain below upper 
breakeven point 
 
When To Execute? 
 
When you expect decrease in volatility with stock price remaining range bound 
 
Trade 
 
Buy 1 lot ATM call and Sell 2 lots OTM Calls with same expiration date 
 
Maximum Profit 
Maximum Profit limited to difference between the strikes plus( the net credit received) or minus( net 
debit paid) all multiplied by net long contracts 
 
Maximum Loss 
Maximum Loss is unlimited above higher break even point as you are short more option then being long 
 
Advantages 
 
Net credit received act as a cushion for any downside movement in stock 
 
Profitable when stock remains range bound between two strikes as it has higher theta gain 
 
Disadvantages 
 
Uncapped risk if stock rises above higher BEP 
 
Managing the trade if stock rises too fast too early 
 
Comparatively complicated trade for intermediate trade  

​Time decay is generally harmful to the option position